—Adjusting the index of “proportion of R&D expenses in sales revenue”

—Adjusting the index of “proportion of scientific and technical personnel”

—Adjusting the demand for intellectual property in the determination conditions

—Shortening the time of publication

—Adding the content of relocation between different places

With approval from the State Council of China, the Ministry of Science and Technology, the Ministry of Finance and the State Administration of Taxation of China jointly issued the revised Administrative Measures for Determination of Hi-tech Enterprises (hereinafter referred to as “the revised Measures”) recently and further improved the work of determination of hi-tech enterprises. The revised Measures have been in effect from January 1, 2016.

The three ministries formulated the Measures in 2008 (hereinafter referred to as “the 2008 Measures”). For the eight years since its implementation, the 2008 Measures was carried out smoothly with good effects, yet with the development of China, it was also found to be defective in some aspects. For example, the scope of technical fields it regulated was falling behind the economic development, and some emerging industries, especially the modern service industry, haven’t been sufficiently embodied in the technical fields provided in the 2008 Measures; the determination conditions stipulated in the 2008 Measures couldn’t meet the new demands of development anymore, and the supports to small and medium-sized enterprises were insufficient; and the determination procedures needed to be improved and the follow-up supervisions needed to be strengthened. Regarding the abovementioned problems and defects, the three ministries, on the basis of extensive and in-depth researches and studies, made corresponding amendments and issued the revised Measures, aiming to promote the adjustment of industrial structure and enhance the momentum of sustainable growth. 

It is known that the revision adheres to four principles, i.e., insisting on Hi-Tech-oriented approach, keeping pace with time, supporting both innovation and entrepreneurship and combining decentralization with supervision, takes strategic emerging industry, modern service industry and new business forms into the range of support, and imposes limitations on outdated technologies. The revised Measures increases the support for small and medium technology-based enterprises, properly loosens the determination conditions for small and medium-sized enterprises, and impels both innovation and entrepreneurship.

According to the introduction of relevant officials from the three ministries, the revision of the Measures mainly concentrates on the following five aspects:

—Adjusting the index of the "proportion of R&D expenses in sales revenues". In order to allow more small and medium-sized enterprises to enjoy the benefits of preferential policies for Hi-Tech enterprises, for enterprises with sale revenues of no more than 50 million yuan in the latest year, the proportion of the amount of R&D expenses in the total sales revenues in the corresponding time is changed from 6% to 5% in the revised Measures, benefiting small and medium-sized enterprises with smaller scale and less R&D expenses.

—Adjusting the index of “proportion of scientific and technical personnel”. At present, the forms of R&D of enterprises vary greatly, the industry-university-research cooperation continues to deepen, R&D outsourcing and open crowdsourcing gradually grow into the tendency in China, and enterprises are increasingly dependent on external forces to carry out R&D activities. In order to meet the development demands of enterprises’ R&D innovation, the condition of “the proportion of scientific and technical personnel with degrees from junior colleges or above shall account for more than 30% of the total number of staff of the year, therein, the number of R&D personnel shall account for more than 10% of the total number of staff of the year” is changed to “scientific and technical personnel engaged in R&D and relevant technical innovation activities in the enterprise shall account for 10% or more of the total number of staff” in the revised Measures.

—Adjusting the demand for intellectual property in the determination conditions. The original limitations of obtaining IP rights “in the last three years” and “by exclusive license of over 5 years" are both repealed in the revised Measures. Such revision encourages enterprises to conduct R&D independently, and also helps avoid the abuse of IP rights. Enterprises can still obtain IP rights and facilitate the commercialization and industrialization of scientific and technological achievements through transfer of technology, which can contribute to the better implementation of the Law of Promoting the Transformation of Scientific and Technological Achievements of China.

—Shortening the time of publication. The time of publication of the determined enterprises on the website of “Hi-Tech Enterprises Determination and Management” is shortened from 15 working days to 10 working days, improving the work efficiency.

—Adding the content of relocation between different places. In order to promote regional industrial transfer and harmonious development of regions, the content of mutual recognition of qualifications of enterprises relocating between different places is added in the revised Measures. It is explicitly provided in the revised Measures that the qualification of a hi-tech enterprise entirely relocating between regions administered by different determination authorities remains valid if it relocates within the period of validity of its qualification as hi-tech enterprises.  

—Relevant officials from the three ministries indicates that as the attachment to the Measures, the Hi-Tech Fields Specially Supported by the Government is also revised accordingly. Compared with the original technical fields, its main changes are: the scope of service industry supporting technologies are expanded, new technologies of relevant fields are added and outdated technologies are deleted, and the contents are further normalized with improved technical features.